CINCINNATI — Kentucky's key bourbon industry finds itself staring down the barrel of potential new, EU-imposed tariffs come March, thanks to an ongoing trade war between the United States and the European Union.
The threat stems from actions taken by the first Trump Administration in 2018, when the U.S. first slapped 25% and 10% tariffs on European steel and aluminum imports, respectively. European Union officials then imposed a 25% retaliatory tariff on American whiskey exports, which it suspended in 2022.
"We saw tens — if not hundreds — of millions of millions of dollars of impact on exports that the bourbon industry is just recovering from," Kentucky Gov. Andy Beshear said during a Jan. 16 press conference. "A state, again, that voted for Trump by 30 points will get hit incredibly hard."
Following the suspension of tariffs, U.S. whiskey exports increased 32% to the European Union compared to 2021, according to the Distilled Spirits Council of the United States.
"The impact of the 2018 tariffs was pretty significant. We lost hundreds of millions of dollars in exports every year," Eric Gregory, president of the Kentucky Distillers Association, said. "When you look at the lost revenue (between 2018 and 2021) that we would have gotten, it's about $580 to $600 million — and again, that's at 25%."
The suspended EU tariffs are set to take effect again on March 31 at 50% if no agreement is reached between the European Union and the United States on imported steel and aluminum.
"We're trying to sound the alarms as much as possible that these are good, paying American jobs that are in jeopardy," Gregory said. "We have been caught up in trade wars that have nothing to do with whiskey."
"If the Trump Administration engages in the blanket tariffs that we are at least reading about, we are likely to get another bourbon tariff," Beshear said. "That will be incredibly detrimental to our Kentucky economy. It will impact Kentucky in a way that it will impact no other state."
Distillers in the commonwealth export more than 95% of the world's bourbon products. According to Gregory, between 2008 and 2018, the bourbon industry's exports grew 150%.
"The EU has traditionally been our largest export market, with Canada and Mexico (being) a pretty close second," Gregory said. "We were going great guns towards the EU from the years 2009 through 2017 before the tariffs took place."
Gregory said looming tariffs are just the latest emerging factor to threaten the bourbon industry's strong financial standings.
"The new Generation Z (isn't) drinking as much. You've got everything from weight loss drugs that deter the effects of alcohol to supply chain issues," he said. "When you look at cutting off a major supply market like the EU with all this bourbon sitting here, that's that's a recipe for trouble."
Kentucky's signature industry is now aging a record 14.3 million barrels of Bourbon, according to the Kentucky Distillers Association.
"You can only make bourbon in America. And these are American jobs," Gregory said. "We need President Trump's help to figure out a way to help us get out of this mess that we've been ensnared in."
